ITALY: CONSOB clarification on exemptions from mandatory bid rule for Italy takeovers

Monday November 25 2013

CONSOB, the Italian securities market regulator, has provided guidance on its website as to the application of the mandatory bid rule on restructuring for Italy takeovers. In its press release, CONSOB states it has considered that there is no obligation to bring a take-over bid over shares of a listed company in accordance with Art. 106, subsection 1 and 3 letter b) of Italian Legislative Decree no. 58/1998 regarding a complex recapitalisation and debt restructuring operation to be implemented on the basis of an agreement reached by the company with its subsidiaries and certain banks, and which has been approved by the competent court in accordance with Art. 182-bis of the Bankruptcy Law.

The agreement which was submitted to CONSOB for guidance envisages four share capital increase operations – which are functionally inter-connected insofar as they are part of a single rescue operation – to be carried out in the form of the issue of new ordinary shares in the listed company, with voting rights and characteristics that are identical to those in issue, partly with the exclusion of stock options and consequently thereby diluting the existing share ownership structure.

In developing the various stages of the recapitalisation, some shareholders of the listed company, which signed the agreement, may exceed the significant thresholds for the purpose of Italy takeover bid obligations.

In analysing the query, the Commission expressed the advice that the exemption pursuant to Art. 49, subsection 1, lett. b), no. 1 (ii) of the Issuers` Regulation is applicable ipso iure to the proposed operation. It is the so-called “rescue” exemption applicable to companies in a crisis, as certified by the approval of a debt restructuring agreement in accordance with the mentioned Art. 182-bis of the Bankruptcy Law, disclosed to the market.

In this regard, in particular the Commission considered that (i) the purchases envisaged by the operation will be carried out in the presence of a recapitalisation of a listed company and represent an intervention by which to strengthen the equity of said company; (ii) the exceeding of the 30% threshold would have the effect of the subscription of the share capital increase in the presence of elements meeting the criteria for exemption pursuant to Art. 49, subsection 1, letter b), (ii) of the Issuers` Regulation.

Click on the above link for the press release.